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Invented by William F. Friedman in 1936 after he conceived the idea for the C-325 in 1935. C-325 was also known as SIGFOY, and was a response to the German Enigma machine. A patent was filed August 14,1944 but, for security reasons, the patent was not issued until March 17, 1959. The machine contained three intermediate rotors and one reversing rotor and powered by two flashlight batteries.

From 1944 to 1946, more than 1,100 units were distributed to all posts of the U.S. State Department's Foreign Service. It was found not to meet the operational requirements of the State Department so its operational use was discontinued in 1946. Many of its problems were attributed to faulty construction leading to many encryption errors and the delicate bulbs and batteries which caused problems in the field.